12 tips to avoid crypto scams
People get ripped off online all the time. The especially get ripped off in the world of cryptocurrency. You might even know someone who had their savings wiped out by a fake alt coin. To keep you out of a similar situation, here is a list (by no means exhaustive) of some suggestions on how to avoid all of this.
#1: Don’t invest in crypto
Photo: Michael M. Santiago, Getty Images
Let’s get this out of the way. At the risk of sounding like a high school health teacher, we all know that the surest way to avoid gonorrhea is to practice abstinence. Avoid drug addiction by not using drugs, yadda yadda. But the point remains: the surest way to avoid losing your savings in a cryptocurrency scam is to not invest in cryptocurrency at all.
You’ve heard this from us before, but we’ll say it again: Many people – especially those in the financial industry – have warned that crypto itself is a big scam…or at least that it’s an empty bubble doomed to implode (one day).
Whether you choose to listen to the likes of Warren Buffet or Peter Thiel is up to you, but I would personally recommend a Web3-free lifestyle.
#2: If you Have To invest, do your research
Photo: Jack Taylor, Getty Images
OK, OK, if you decide to must invest in cryptocurrency, the least you can do is spend time researching the assets and platforms you plan to invest in. You should use a lot time, proportional to how much you invest. Like, pretend you’re buying a house.
Many of the people being scammed are newcomers to the crypto industry (although victims run the gamut in experience level), which makes a lot of sense, since crypto is quite complicated. It’s easy to get lost in the maze of terms, assets and traders. Organizational complexity plus large money transfers is usually the perfect formula for fraud, so here are a few suggestions:
— Research the company or platform you are thinking of investing in. Who are the developers behind the project? How big is the team? How trustworthy are the people? Do they have LinkedIn profiles and social media? Do they have a proven track record of working with other crypto projects? Does the asset have any notable investors behind it that will lend it credibility? — Carefully examine the websites connected to the platforms and applications you use. Make sure they are not lookalike apps designed to trick you. Know them for professionalism and authenticity. — Consider asking someone who works in the cryptocurrency industry and whom you trust for advice on whether or not to invest in a particular project. — Consider whether there is a real community around the platform or coin you are considering investing in, or whether it is just a creep on the internet making big promises.
In short: do your homework!
#3: Start small and stay small
Photo: JUSTIN TALLIS/AFP, Getty Images
According to a review of the evidence by Time, when investing in crypto, you should only invest the amount you are willing to lose. Think of it as gambling. If that doesn’t exactly inspire confidence, I’m not sure what to tell you other than to review slide #1. In fact, experts say that your crypto investments should never rise above 5 percent of your total portfolio. Many a sob story has been told of a green investor who puts their savings into a platform or coin, only to realize it was a scam and lose it all.
#4: Secure your wallet
Photo: GEOFFROY VAN DER HASSELT/AFP, Getty Images
Like your real wallet, your crypto wallet is where you store all your money. Just as you don’t want someone to pick your pocket, you don’t want some digital crook to get into your online. The security of your wallet depends on the type you use, but suffice it to say: keep that thing locked up. Never give out permissions or personal information related to it to an internet trando. There are tons of safety guides, so check them out.
#5: Read a coin’s white paper, but don’t take it too seriously
Screenshot: Lucas Ropek/Ethereum White Paper
It’s always a good idea to read that “white paper”, even if many crypto messages, manifestos and technical descriptions end up being semi-horror. The “White Paper” is intended to be the bedrock of credibility upon which a Web3 platform rests. It’s the business plan and vision behind the company and its coin – and it usually deals with the “revolutionary” technology used to make it all happen. Still, an investigation by Decrypt not long ago found that many white papers are written by contractors with “limited technical knowledge” of the concepts they’re writing about — and many contractors are asked to “fabricate and exaggerate facts,” according to the review. Still, maybe worth a read. If a company can’t even hire people to write or proofread its big claims, that could be a red flag for a bigger scam at work.
#6: Guarantees of “Big Returns” are bullshit
Photo: LUIS ROBAYO/AFP, Getty Images
Hucksters have been promising “free” and “easy” money since before the dawn of the New York Stock Exchange, and Web3, transformative as it is supposed to be, hasn’t changed that.
While many scammers may promise big returns and tell you that you can’t go wrong with their product, authorities say those promises are bogus. Nothing in life is certain – especially not financial investments, and definitely not investments in a speculative digital coin that you just heard about two weeks ago. The FTC writes:
The value of a cryptocurrency can change rapidly, even changing from hour to hour. And the amount of change can be significant. It depends on many factors, including supply and demand. Cryptocurrencies tend to be more volatile than more traditional investments, such as stocks and bonds. An investment worth thousands of dollars today may be worth only hundreds tomorrow. And if the value goes down, there is no guarantee that it will go back up.
Wise words!
#7: Stay away from online Crypto Baes
Photo: DENIS CHARLET / AFP, Getty Images
If someone approaches you on Tinder and suggests that you invest in their new DAO, it’s best to cancel the match immediately. We recently wrote about the harmful trend known as “pig slaughtering”, where criminal syndicate-backed scammers run “romance scams” on lonely netizens and take them for everything they’ve got. Many of these scams start on popular dating apps (Tinder, Bumble, Hinge, and others) and then slowly turn into money-stealing nightmares. All the more reason not to date someone who professes an interest in Web3.
#8: Ignore celebrity endorsements
Photo: ANGELA WEISS / AFP, Getty Images
A flood of celebrities have recently decided that it’s a good idea to shill for crypto. It may seem strange at first, but the answer to “Why?” is that the celebrities want money. But just because your favorite pop star has decided to back a newfangled alt coin doesn’t mean it’s a worthy investment (it probably just means the pop star wanted a new yacht and Big Crypto was willing to pay for it).
Last year, Kim Kardashian was sued for promoting what turned out to be a “pump and dump” scheme, according to a lawsuit against the billionaire and others involved. Even if your favorite reality TV star gives you investment advice, you probably shouldn’t take it.
#9: Beware of Lookalike Scams
Photo: Marco Bello, Getty Images
One of the most common types of cryptocurrency scams is “lookalike” scams, where cybercriminals use fake apps and websites that look exactly like the websites of popular cryptocurrency platforms and products. In just one report published earlier this year, cybersecurity analysts found a total of 249 fake cryptocurrency wallets for iOS and Android that were used to steal millions of dollars in crypto from unsuspecting users. There’s probably a lot more where it came from. The best way to make sure you are not being taken advantage of is to thoroughly research the platforms and applications you use and examine them for signs of shady practices.
#10: Beware of carpet covers
Photo: Marco Bello, Getty Images
Of all the crypto scams, the rug pull is one of the most dramatic. It occurs when the developers of a particular crypto project suddenly withdraw from the project and take all the investors’ money with them. The thieves then usually flee to an unknown country with the winnings and are never heard from again. Last year, approximately $7.7 billion ($11) billion was estimated to have been lost to such fraud attempts.
How can you tell if a company is a rye-pull waiting to happen? Of course, you can’t know for sure, but usually these organizations are new startups, and sometimes the backers are unknown or don’t provide full information about themselves, according to CoinTelegraph. “Over-promotion” can also be a sign of shadiness, as it can demonstrate an attempt to hide a lack of substance. Lack of transparency around code revisions is also a bad sign.
In general, you should investigate an organization for how much it discloses about its developers – which can be quite difficult to do, given the crypto community’s love of anonymity and privacy.
#11: Beware of all this shit
In the previous slides, we highlighted some of the most common crypto scams (romance scams, fake apps and carpetbaggers), but it’s worth noting that there are a lot more out there. To mention some:
— Ponzi scams — Impersonation scams — Initial coin offering scams — Fraudulent or inflated offers
…And of course, even if you’re holding crypto on a reputable Web3 platform, there’s always a chance that cybercriminals will find some security flaws in the platform and manage to hack your money right out of it. This has already happened quite a bit this year alone. So watch out!
#12: Finally, don’t invest in crypto
Photo: Marco Bello, Getty Images
Well, it looks like we’ve come full circle. If you don’t have millions of dollars to burn pointlessly, I would again strongly recommend that you do not invest in cryptocurrency. Just don’t do it. Use “real” money governed by a regulatory body, not fake money created by strangers on the internet. Let’s face it – Bitcoin and the like are for the idle rich! Bitcoin is too expensive. Unless you’re a millionaire with no concept of fiscal responsibility, Bitcoin is pretty much for bozos! You don’t want to be a bozo, do you? If Seinfeld was still on TV, we all know that both Kramer and George wanted to invest in Bitcoin and it’s clear that they are the two most bozo-like characters on the show. I think I’ve run out of ways to say the same thing, so I’ll just say goodbye. Do not do it.
